Laredo Oil, Inc., an exploration and production company, announced that Hell Creek Crude, LLC (HCC), a wholly owned subsidiary of the company, has entered into a participation agreement between HCC, Erehwon Oil & Gas, LLC (Erehwon) and various accredited investors.
The participation agreement will initially provide $2,034,000 million in cash to fund the drilling of a development well and the acquisition of certain leases currently held by Lustre Oil Company, LLC, a wholly owned subsidiary of the company, in the Midfork Field in Montana. Several of the participating investors also hold $575,000 in the company's convertible debt, plus accrued interest, which investments are included as investments under the Participation Agreement.
Until the total of the $2,609,000 in cash and notes is repaid to the various investors, the net working interest payments from the participation agreement will be split between the various investors and HCC and Erehwon, collectively on a 90%/10% basis. After the repayment to the investors, the split between the investors and HCC and Erehwon will be on a 50%/50% basis. After the development well is drilled, the investors have the option to invest in up to two additional wells in the field.
According to Mark See, Chairman and CEO of Laredo Oil, Inc., "This agreement enables us to develop another well in a proven and developed oil field on our mineral leases outside the area of mutual interest under our agreement with Texakoma. I expect that this will be another successful well, improving our ability to increase cash flow, access additional capital to develop our leases and increase our enterprise value by adding additional proven developed and proven undeveloped reserves."
